The education sector has evolved significantly over the past decade. The marriage between education and innovation has effectively transformed the industry, giving way to a new breed of growth stocks in this sector.
The past year or so has been remarkably tough for virtually every industry, including the education sector. Education is not an industry that performs well during an economic downturn, with people delaying or reducing spending, while government funding may also be impacted. These headwinds tend to affect education stocks, which shed significant value last year.
Nevertheless, it’s important to not underestimate the significance of e-learning in this current economic environment. The market for online education could be worth $166 billion this year, and grow at a 9.4% annual clip through 2027. Therefore, investing in these edtech growth stocks can provide lucrative returns over time.
| COUR | Coursera | $11.52 |
| DUOL | Duolingo | $142.59 |
| LRN | Stride | $39.25 |
Coursera (COUR)
Coursera (NYSE:COUR) is an online education platform offering courses on various subjects. Its systems have been designed by the leading universities globally and offer targeted solutions for students, effectively avoiding elective fluff.
Furthermore, the platform makes excellent use of emerging technologies such as artificial intelligence to personalize learning experiences, recommend courses, and offer real-time feedback. Moreover, Coursera also identifies at-risk students that could fall behind in their classes. These measures ensure that users have tailored learning experiences based on their goals.
Like other edtech stocks, the pandemic led to robust growth for the company. It generated more than $293 million in sales in 2020 from over 77 million registered learners. Growth rates have slowed since then, but are still ahead of industry averages. Its registered learner base has grown to 118 million as of last year, a 53% improvement from 2020.
Duolingo (DUOL)
Duolingo (NASDAQ:DUOL) is a leading language learning platform that offers an interactive and user-friendly approach to learning languages. The platform offers various lessons, including vocabulary, listening, and grammar exercises, with gamification techniques to motivate users. Moreover, it astutely integrates AI to teach, learn, and translate.
Its game-like learning experience has struck a chord with its target market, with the company witnessing double-digit revenue gains annually. In its most recent quarter, Duolingo posted revenue of $103.8 million, a whopping 42% improvement from the prior-year period. More importantly, its adjusted EBITDA was at a healthy $5.2 billion, a massive 1633% improvement from last year.
During its fourth quarter, the company saw a colossal increase in monthly and daily active users, growing by 43% and 62%, respectively. As one of my InvestorPlace colleagues Faizan Farooque pointed out last year, its subscription base is slim, an argument that’s still relevant. However, though subscriptions represent a small portion of its monthly user base, the company’s double-digit growth cannot be taken lightly.
Stride (LRN)
Rounding out this list of growth stocks to buy in the education sector is Stride (NYSE:LRN). Stride provides education services for children, high school students, and adults through robust software systems and online curricula. Though its origin lies in the homeschooling niche, the company made a strategic move to diversify its education portfolio effectively. Consequently, the company changed its name from K12 to stride in late 2020 to broaden its learning solutions for students of all ages.
The company has done remarkably well, growing its business through acquisitions to enter new markets. For instance, its career learning business has witnessed incredible growth over the past year, offsetting losses from its general education division. In the most recent quarter, Stride saw revenues in its career learning business grow by 91%. The firm predicts an incredible total addressable market of $100 billion in the U.S., providing scalable solutions to tap into this enormous opportunity.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.